NASHUA – Elaine Casperson has been in school for years, working to pay the bills and support her three children while moving through programs at Hesser College, Nashua Community College and now Rivier University to become a nurse practitioner.

She did everything she could to be smart about her higher education spending: taking her general education courses at the community college, where she now works, to save money before transferring to Rivier. ...
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NASHUA – Elaine Casperson has been in school for years, working to pay the bills and support her three children while moving through programs at Hesser College, Nashua Community College and now Rivier University to become a nurse practitioner.

She did everything she could to be smart about her higher education spending: taking her general education courses at the community college, where she now works, to save money before transferring to Rivier.

But with one child also in college, Casperson, 42, of Nashua, is facing a still-growing mountain of student loan debt.

“I don’t work a lot of hours, and I don’t make a lot of money,” she said. “I’m going to school to better my life and the life of my family, but I’m nervous it’s never going to happen because I’m going to be paying these loans off until the day I die.”

Casperson isn’t alone: Students around the state already are facing steep financial challenges on their path to higher education, graduating with an average of $32,000 in debt, the highest in the nation.

Unfortunately, the worst may be yet to come.

If Congress doesn’t act, interest rates for new federal subsidized Stafford loans – those given to some of the nation’s neediest students – are set to double July 1, from 3.4 percent to 6.8 percent.

“That would affect me hugely,” Casperson said. “I’m already watching my loan payments going up each month. It makes me nervous. If they’re intending on doubling the interest, I don’t know how they expect people to pay all this back.”

A doubled interest rate for student loans was pending this time last year, too, as an automatic increase built into plans to reduce the federal deficit. Officials have said a higher interest rate would bring in billions.

The increase was stalled for one year, but this year, a last-minute fix is looking less likely.

Bills have been introduced in the Senate and House – including one co-sponsored by N.H. Rep. Ann McLane Kuster – but nothing has progressed toward law.

While interest rates are still up in the air, though, one thing is clear: With the highest average debt in the nation, New Hampshire students will be hit especially hard by an increase.

Debt by the numbers

Outstanding student loan balances in the United States total about $1 trillion, surpassing even credit card debt.

While credit card and mortgage debt fell in the aftermath of the recession, student loan debt increased, according to a study from the Urban Institute released this month. One in every five Americans 20 or older, and about two of every three college students who graduated in 2011, has student loan debt, owing a national average of $27,000.

Many are already struggling to pay those loans back: 17 percent of all Americans with loans are in delinquency, the study found, and concerns about repayment are found across all income spectrums.

In New Hampshire, an estimated 47,290 borrowers of Stafford loans would be affected by an interest rate increase, said Michael Russo, federal program director for the United States Public Interest Research Group.

Each of those borrowers would pay an average of $883 more over the life of each loan taken out, increasing their collective debt load by $42 million.

“This is money that could otherwise be used to save up for homes, weddings, to pay off other debt incurred or to just inject into the state economy,” Russo said.

Tara Payne, vice president of the New Hampshire Higher Education Assistance Foundation Network’s Center for College Planning, said she has heard these concerns from plenty of students and parents looking to pay for higher education.

But she said a rate increase likely won’t result in fewer students attending college or borrowing to pay for it. Instead, it will simply mean an even bleaker financial future for the state’s already needy residents.

“Students received subsidized student loans because they do not have the family resources to pay,” she said. “There is no flexibility in how they’re going to manage the cost of college. The students will take them, and they will just be in more debt.”

Too often, Payne said, even those students who may have choices in how they pay for college do not fully understand just what they’re getting into when they take out student loans.

The price of inexperience

While student loans may not be the largest debt most young people take on – the mortgage on a first home likely coming in much higher – Payne said student loan debt differs in the way people prepare for and understand it.

“When you have sticker prices at $30,000 for in-state institutions, families are really just focused on how they’re going to make that work in the big picture,” she said. “It isn’t until they’re getting ready to sign the promissory notes for the loans that the details on the interest rate and what the impact could be comes to light. … Students rarely understand the complexity of taking out that loan obligation.”

Still, there are regulations in place when it comes to the information student loan lenders are required to share with students.

The Higher Education Act of 2008 outlines those requirements, based on the Truth in Lending Act.

Under those laws, students must have access to annual and aggregate loan limits; the terms and conditions of loans; costs of borrowing, including fees and accrued interest; the consequences of default; and bankruptcy limitations upon lending.

But even if this information is shared, it doesn’t mean the students paying back the loans are seeing it.

For many young students, parents frequently handle lending, Payne said, and students may not play a significant role in the process until it’s time to pay the money back.

“We’ve definitely had parents call about a student’s loan and say, ‘Our loan is coming due,’ ” she said. “I think parents are still definitely involved in the financing decisions about college.”

Christa Jeck, 22, a New Boston graduate of the University of New Hampshire, said her mother co-signed many of her loans, and Jeck wasn’t really involved until she graduated.

Now, she’s facing thousands in private and federal loans, paying them off while trying to find work in her field of linguistics.

Unfortunately, the job she really wants – teaching English as a Second Language – will require graduate school, and more loans.

“I probably won’t be going back unless I find that I have a definite job,” she said. “My loans are kind of staggering. I feel like I’ll be paying back loans for the rest of my life.”

Casperson said she frequently sees Nashua Community College students in similar situations through her work in the school’s advising center.

“A lot of these young students are taking every loan being offered to them every semester and living off of it,” she said. “They’re basically screwed if the interest rates double. They’re completely overwhelmed and going into default.”

What can be done

Payne said she’s still hopeful a fix would be found for student loan interest rates. But that wasn’t stopping her, or the NHHEAF Network, from educating families about what would happen if one doesn’t emerge.

“We’ve been talking with families about the expected increase of the rates for months,” she said. “But many of the families that we work with, because the rate didn’t increase last year, still have this hope that they will not increase again.”

For many families, Payne said, choosing a college and payment options is an emotional decision, with many factors besides potential debt playing a role.

“They’ll think it’s worth borrowing that extra $5,000 to $10,000 because their child ‘deserves’ the opportunity to go,” she said. “That’s when we have to ask, ‘But does he deserve to over four years to borrow more than $40,000 more?’ These are difficult conversations.”

Still, Payne said students are getting savvier, thanks to more open financial discussions among families and an increasing awareness of the cost of higher education. If the interest rates on loans do increase, she said, students will have to work even harder to be good consumers.

But for students already working on a degree, such as NCC graduate Erica Taylor, 28, of Nashua, being savvier in their college spending is a challenge.

For Taylor, it could mean putting off earning her bachelor’s degree in hospital management or ending her college career altogether.

“It’s frustrating, to come this far with three kids and then just turn around and say ‘I am done,’ ” she said. “But I don’t want to put my young family in a significant amount of debt just to continue my education.”

Taylor said she’s hopeful Congress will find a fix for local students. If they don’t, she said, she risks not only her education and a better career, but also the chance to set a good example for her children.

“There’s just no way my growing family can afford to put ourselves in more debt,” she said. “But I want to be a good role model. How can I tell them that they have to go to college when I wasn’t able to complete college myself?”

Danielle Curtis can be reached at 594-6557 or dcurtis@nashuatelegraph.com. Also, follow Curtis on Twitter (@Telegraph_DC).